Outlook: The energy complex is looking at a more tame start today with crude and products trading mixed. Natural gas is observing significant gains this morning with weather models tipping more bullish toward heating demand. For supportive news, Russia has suspended a portion of its crude loadings due to bad weather in the Black Sea and India is seeking out alternative crude sources due to shipping delays in the Red Sea. The US dollar is also lower again today and economic sentiment still feels positive with anticipations of an earlier-than-expected rate cut next year. On the bearish side, crude in floating storage rose 14% w/w which reinforces opinions of an oversupplied crude market. The prompt WTI crude spread remains in Contango but has shifted nearly 20 cents closer to even from when the January contract was in the front month. The early Reuters poll suggests crude stocks fell last week and we’ll get the API survey this afternoon for another look-in.
Crude
- The DoE announced its tender offer for 3 million barrels of sour crude for March delivery yesterday to refill the SPR.
- Russian oil loadings at the Black Sea port of Novorossiisk were suspended today due to a storm.
- India is seeking alternative crude sources due to shipping delays from the Red Sea conflict.
- Global crude in floating storage rose 14% w/w according to Vortexa data.
- Fitch Ratings does not forecast a recession for the US in 2024.
- CME FedWatch suggests a 74% chance for a rate cut at their March meeting.
- Reuters estimates crude stocks fell by 2.6 million barrels last week.
- The API will report its survey results this afternoon at 3:30pm CT.
- As of 8:07 am CST: Brent crude oil down $0.53 to $80.54, US dollar index down $0.175 to 101.291 while the nearby e-mini S&P 500 futures contract is down 1.25 to 4824.00.
Diesel
- Reuters estimates diesel stocks rose 1 million barrels last week.
- The prompt diesel spread has dipped below 2 cents, trading to a low of 0.0185 this morning.
Gasoline
- Reuters estimates gasoline stocks rose 400,000 barrels last week.
- Restaurant sales over the holiday were reported at 7.8% above last year which could lean positive for gasoline demand.
Propane
- Conway is trading at .6525 while Belvieu is trading at .7100.
- Conway Swap Oct24-Mar25 strip trading ~.7300.
- Belvieu propane saw a healthy jump yesterday which could signal an uptick in exports.
Natural Gas
- Overnight weather runs added 4 HDDs through the two-week forecast.
- The prompt contract rose 12 cents last week after the EIA reported a larger-than-expected draw.
- Reuters estimates natural gas stocks fell between 72 and 76 Bcf last week.
Continuous Prompt HO Spread: This spread working closer to 0 is favorable for those with short hedges looking to roll to the next month. Jan HO and RBOB are set to expire on Friday.
